I have been working at a Japanese steel company for over 20 years on various investment and trade matters, including a number of trade disputes that have been brought before the dispute settlement system of the World Trade Organization (WTO). In the following chapter, I offer a personal perspective on the subject: ‘Business and the WTO dispute settlement mechanism’.

My discussion addresses some basic questions.

Is the WTO dispute settlement mechanism important to business?

The first question is whether or not the WTO dispute settlement mechanism is important to business. Unquestionably, the answer is ‘Yes’. The dispute settlement mechanism is very important to business. Every decision of the WTO dispute settlement system affects business.

Japanese taxes on alcoholic beverages

To demonstrate the importance of the WTO dispute settlement mechanism, consider a WTO case: Japan – Alcoholic Beverages II. The Japanese government lost this case. The rulings in this case had a tremendous impact on the Japanese alcoholic beverage business. The dispute concerned the Japanese Liquor Tax Law and shochu. Shochu is a traditional colourless distilled liquor (‘white liquor’). The European Communities, together with the United States and Canada, claimed that: (i) shochu was directly competitive with whisky, brandy, and other ‘brown’ spirits; and (ii) shochu and these ‘brown’ spirits were substitutable products, but (iii) that higher tax rates were applied to ‘brown’ spirits, in violation of Article III (National Treatment) of the General Agreement on Tariffs and Trade (GATT) 1994.